Item 1.01.
|
Entry into a Material Definitive Agreement.
|
Contribution Agreement
On November 15, 2016, CONE Midstream Partners LP, a Delaware limited partnership (the Partnership), CONE Midstream GP LLC, a Delaware limited
liability company and the general partner of the Partnership (the General Partner), and CONE Midstream Operating Company LLC, a Delaware limited liability company (the Operating Company), entered into a Contribution Agreement
(the Contribution Agreement) with CONE Gathering LLC (CONE Gathering), a Delaware limited liability company and a midstream joint venture formed by CONSOL Energy Inc., a Delaware corporation (CONSOL), and Noble
Energy, Inc., a Delaware corporation (Noble), and the other parties thereto, under which the Partnership will acquire the remaining 25% limited partner interest (the Acquisition) in CONE Midstream DevCo I LP (DevCo I
LP) from CONE Gathering in exchange for (i) cash consideration in the amount of $140 million, (ii) the Partnerships issuance of 5,183,154 common units representing limited partner interests in the Partnership (the Common
Units) at an issue price of $20.42 per Common Unit (the Common Unit Issue Price) and (iii) the Partnerships issuance to the General Partner of an additional general partner interest in the Partnership in an amount necessary
for the General Partner to maintain its two percent general partner interest in the Partnership. The Common Unit Issue Price was calculated as the volume-weighted average trading price of the Partnerships Common Units over the trailing 20-day
trading period ending on November 11, 2016. The Partnership expects to fund the cash consideration with borrowings under its revolving credit facility. The Acquisition is expected to close on or about November 16, 2016, subject to customary closing
conditions. CONE Gathering will distribute the cash consideration and will have the Common Units issued 50% to CNX Gas Company LLC (CNX Gas), a wholly owned subsidiary of CONSOL, and 50% to Noble Midstream LLC (Noble
Midstream), a wholly owned subsidiary of Noble.
The Contribution Agreement contains customary representations, warranties, agreements and covenants
of the Partnership, the General Partner, the Operating Company and CONE Gathering. CONE Gathering, on the one hand, and the Partnership, the General Partner and the Operating Company, on the other hand, have agreed to indemnify each other and their
respective affiliates, directors, officers, employees, agents and representatives against certain losses resulting from any breach of their representations, warranties, agreements or covenants contained in the Contribution Agreement, subject to
certain limitations.
As of November 15, 2016, (i) CNX Gas owned 4,519,060 Common Units and 14,581,561 subordinated units in the Partnership (the
Subordinated Units), representing an aggregate 32.1% limited partner interest in the Partnership and (ii) Noble Midstream owned 4,519,061 Common Units and 14,581,560 Subordinated Units, representing an aggregate 32.1% limited partner
interest in the Partnership. Each of CONSOL and Noble own a 50% membership interest in CONE Gathering, which owns all of the membership interests in the General Partner. The General Partner owns a 2% general partner interest in the Partnership.
The foregoing description of the Contribution Agreement is not complete and is qualified in its entirety by reference to the full text of the Contribution
Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
The Contribution Agreement has been
included solely to provide investors and security holders with information regarding its terms. It is not intended to be a source of financial, business or operational information about CONSOL or any of its subsidiaries or affiliates or their
assets. The representations, warranties and covenants contained in the Contribution Agreement are made solely for purposes of the agreement and are made as of its date; are solely for the benefit of the parties; may be subject to qualifications and
limitations agreed upon by the parties in connection with negotiating the terms of the Contribution Agreement, including being qualified by confidential disclosures made for the purpose of allocating contractual risk between the parties instead of
establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Investors and security holders should not rely on the
representations, warranties and covenants or any description thereof as characterizations of the actual state of facts or condition of CONSOL or any of its subsidiaries or affiliates or their assets. Moreover, information concerning the subject
matter of the representations, warranties and covenants may change after the date of the Contribution Agreement, which subsequent information may or may not be fully reflected in public disclosures. There can be no assurance that the transactions
contemplated by the Contribution Agreement will be consummated.
Following the closing of the Acquisition, the Partnership will amend and restate its
existing gas gathering agreements with each of CONSOL and Noble (as amended and restated, the GGAs) in order to reflect the transactions contemplated by the recently announced Exchange Agreement under which CONSOL and Noble agreed to
separate their Marcellus Shale joint venture by creating two separate operating areas. The forms of GGAs have been agreed to in the Contribution Agreement and will be executed and become effective in connection with the closing of the Exchange
Agreement. As the GGAs are merely intended to reflect the change in ownership of the properties underlying the Marcellus Shale joint venture as between CONSOL and Noble, the entry into the GGAs is not expected to have a material impact on the
Partnership.